Critical reading from Arthur
AN ANALYSIS last Friday by former Prime Minister Owen Arthur on The Global Economic Crisis: Role Of The International Financial Institutions (IFI) In The Caribbean would make unflattering reading for governments of wealthy donor nations; the IFI, as well as the leaders of our Caribbean Community.It should be a must-read, however, to inspire informed responses. The CARICOM Secretariat should perhaps have copies available for all heads of government in time for their 31st annual summit in Montego Bay on Sunday.Arthur, who has just concluded a consultancy for the Community Secretariat and the European Commission on “the full integration” of the OECS and Belize into CARICOM, made his analysis when addressing the 28th annual conference of the Institute of Chartered Accountants of the Caribbean in the Bahamas.Pledges The address and meeting coincided with the start of the G-20 nations summit in Canada as a follow-up to their historic London summit of April last year. That was when unprecedented pledges were made for new funding to the international financial institutions to enable them to channel financial aid to poor and developing nations.Those pledges for new funding through the IMF and multilateral development banks totalled US$1.1 trillion, as Arthur noted, to carry out a vigorous programme for restoration of credit, growth and jobs to the world economy.More than a year later, there has been no significant benefits to our Caribbean region.Arthur, in referencing an observation by the Jamaican economist, Richard Bernal, that “the Caribbean has been more profoundly and adversely affected by the global crisis than the developed economies and most developing countries”, posed some questions as being relevant to how this region, and specifically CARICOM, have been reacting to the challenges.He asked whether this region has received the full measure of support promised by the world leaders at the G-20 summit. The answer, of course, is no.Taken together, the reversal of the flows of foreign direct investment (which plunged by 42 per cent to US$5.7 billion in 2009); reduction in the value of remittances (US$3 billion the previous year) and the significant decrease in receipts from exports of goods and services led to a situation where the regional economy was “effectively destabilised” in those two years.While shortfalls by the international financial institutions have been articulated, so too failures by Caribbean governments to access new borrowing facilities. For example, the IMF’s Flexible Credit Line (FCL) No Caribbean country has drawn upon the FCL, which was identified as the facility for disbursing the bulk of new IMF financing. In contrast, countries in Latin America, Africa, Asia and Eastern Europe sought access from the FCL with beneficial results.